Practice Exam Problem
Zazzy Company reported the following information for the year 2018:
For the Period Ended December 31, 2018
Cost of Goods Sold
Income from Operations
Income before Income Tax
Income tax expense
Comparative Balance Sheets
December 31, 20XX
Cash and cash equivalents
Accumulated Depreciation - Equipment
Total Liabilities & S/H Equity
1. No equipment was sold throughout the year, so the change in accumulated depreciation is a result of depreciation expense for the year.
2. Stock was issued for cash.
3. Equipment was purchased with cash.
1. Help explain a FULL statement of cash flows for the year 2018, including the Operating, Investing and Financing sections, assuming that Zazzy Company uses the
2. Can a company have a positive cash flow and negative income? What about positive income and negative cash flow? Explain your answer.
Practice Problem Part B
Help explain the FULL Statement of Cash Flows for Zazzy Company for the year 2018, assuming they use the DIRECT method.